In re Jay Kay Trans (GST AAR Tamilnadu)
The Authority for Advance Ruling, Tamil Nadu considered an application filed by M/s Jay Kay Trans, a proprietorship concern engaged in sanitation, solid waste management and urban cleanliness, concerning the classification and GST exemption applicable to services provided to the Greater Chennai Corporation (GCC). The applicant had entered into an agreement dated 02.06.2025 with the GCC for upkeeping and maintenance of Tamil Nadu Urban Habitat Development Board (TNUHDB) Housing Units in Zone 15—Outer Perumbakkam for nine months from 17.05.2025 to 17.03.2026. The work order, valued at Rs.8,94,20,000 inclusive of taxes, required deployment of 369 personnel and supervisors, sweeping and cleaning of common areas, household waste collection, segregation and disposal, provision of bins, brooms, rakes, bleaching powder, lime powder and welfare items for personnel.
The applicant sought rulings on two questions: the classification of the upkeeping and maintenance services and whether the services qualified for exemption under Serial No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. During the personal hearing, the applicant stated that the probable SAC was 999423—General Waste Collection Services, Residential. The applicant contended that the supply satisfied the three conditions of Entry 3A: it was a composite supply of goods and services with the value of goods not exceeding 25% of the total value; it was provided to a local authority; and it related to a municipal function under Article 243W of the Constitution. The applicant also submitted that the value of goods was approximately 1.77%, supported by a Chartered Accountant certificate, and that consumables and welfare items were used for performing the contract without transfer of ownership or possession to the GCC.
The jurisdictional State GST authority stated that the services would fall under SAC 9997—Other Services Not Elsewhere Specified, while also stating that the applicant could qualify for exemption under Serial No. 3A subject to the 25% condition. The Authority examined the agreement and the actual nature of the activities. It noted that the services involved sweeping, cleaning, collection, segregation and storage of garbage and waste in specified bins within the TNUHDB housing units. Since these activities formed part of solid waste management, which was identified as a municipal responsibility, the Authority considered the specific classification under Heading 9994 and Group 99942 rather than the residuary heading.
The Authority referred to SAC 999423—General Waste Collection Services, Residential, which covers general collection of waste, garbage, rubbish, refuse, trash and commingled materials from residential locations. It concluded that the applicant’s services of upkeeping and maintaining the TNUHDB units, including daily sweeping, cleaning and garbage removal from common areas, were appropriately classifiable under SAC 999423.
On the exemption issue, the Authority examined Entry 3A of Notification No. 12/2017-Central Tax (Rate), under which a composite supply of goods and services can qualify for Nil-rated treatment where the prescribed conditions are satisfied. The Authority first considered whether the applicant’s supply constituted a composite supply under Section 2(30) of the CGST Act, 2017.
The agreement required the applicant to undertake cleaning and garbage collection services and also to procure bins, sweeping kits, brooms, rakes, bleaching powder, lime powder and welfare items. However, the Authority observed that the applicant itself had submitted that there was no transfer of ownership or possession of the consumables or welfare kits to the GCC and that these items were merely used for performing the work. The Authority therefore found that the contract did not involve a supply of goods to the GCC. According to the Authority, the GCC was specifying the personnel, welfare kits, consumables and bins required to ensure satisfactory performance of the contracted services, with their costs borne by the applicant.
Consequently, the Authority held that the essential requirement of a composite supply of goods and services was not satisfied. Since the first condition for exemption under Serial No. 3A was absent, the Authority considered it unnecessary to examine the remaining conditions, which had to be simultaneously satisfied for the exemption.
Accordingly, the Tamil Nadu Authority for Advance Ruling ruled that the services of upkeep and maintenance of TNUHDB units in Zone 15—Outer Perumbakkam provided under the agreement with the Greater Chennai Corporation fall under SAC 999423—General Waste Collection Services, Residential. It further ruled that the applicant was not eligible for exemption under Serial No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and the corresponding TNGST notification, as the impugned supply was not a composite supply of goods and services.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING TAMILNADU
M/s JAY KAY TRANS, having place of business at 9/11, First Floor, Valarmathi Nagar Second Street, Kolathur, Chennai-600099 (hereinafter called as the “Applicant”) has registered with GSTIN 33BYXPS6648Q2ZZ under the Goods and Services Tax Act. They have filed this application for advance ruling under Section 97 of the CGST Act, 2017, and corresponding provisions under the Section 97 of TNGST Act, 2017. The Applicant has made a payment of application fees of Rs.10,000/- under sub rule (1) of Rule 104 of CGST Rules, 2017 and TNGST Rules, 2017_
2. Statement of relevant facts having a bearing on the questions raised.
1) The applicant is a. proprietorship concern of Mr. Gokul Ram, having registered office at No. 09/11, Valarmathi Nagar, 2nd street, Kolathur, Chennai-600099. The applicant is engaged in the business of sanitation, solid waste management, and urban cleanliness. The Applicant is registered under the GST Act, 2017, with the GSTIN 33BYXPS6648Q2ZZ.
2) Tamil Nadu is one of the most urbanised states in the country with around 53% of urban population in 2021 and is expected to be 57% by 2030. In order to provide inclusive housing for the urban poor families in Tamil Nadu, The Tamil Nadu Slum Areas (Improvement and Clearance) Act, 1971 (Tamil Nadu Act 11 of 1971) was enacted with the objectives of improvement in slum areas by providing basic amenities including affordable housing to urban poor families. Section 34 of the Tamil Nadu Slum Areas (Improvement and Clearance) Act, 1971 provided for the establishment of the Tamil Nadu Slum Clearance Board.
3) Subsequently, the Government changed the nomenclature of Tamil Nadu Slum Clearance Board as “Tamil Nadu Urban Habitat Development Board” vide G.0. (MS). No_103, Housing and Urban Development Department, dated 01.09.2021. Accordingly, the Government amended the Tamil Nadu Slum Areas (Improvement and Clearance) Act, 1971 (Tamil Nadu Act 11 of 1971), to provide a statutory footing to the aforesaid change in nomenclature of the Board.
4) The Greater Chennai Corporation, established under the Chennai Municipal Corporation Act, 1919, floated a tender for appointment of an agency for upkeeping and maintenance of the Tamil Nadu Urban Habitat Development Board Housing Units in Zone 15 — Outer Perumbakkam for a period of nine months from 17.05.2025 to 17.03.2026.
5) The Applicant submitted a bid for the aforesaid tender floated by the Greater Chennai Corporation which was accepted and approved vide Council Resolution No 524/2025 dated 30.04.2025.
6) The award of the aforesaid tender for upkeeping and maintenance of Tamil Nadu Urban Habitat Development Board Housing Units in Zone 15 — Outer Perumbakkam was communicated to the Applicant by the Superintending Engineer, Solid Waste Management Department, Greater Chennai Corporation, vide letter dated 02.05.2025. The Work Order provided that:
a) The total contract amount was Rs.8,94,20,000/- (inclusive of all taxes) subject to the conditions mentioned therein.
b) The parties were to execute an agreement within seven days of the receipt of the work order.
7) Pursuant to the work order dated 02.05.2025, the Applicant entered into an Agreement for upkeeping and maintenance of the Tarnil Nadu Urban Habitat Development Board Housing Units in Zone 15 — Outer Perumbakkam with the Greater Chennai Corporation represented by its Executive Engineer, Solid Waste Management Department, vide Agreement dated 02.06.2025 with the reference SWMC No A7/1362/2025.
8) Further, Clause 6(b) of the Agreement dated 02.06.2025 provided that the services specified in the Request for Proposal (hereinafter referred to as “RFP”) document shall form an integrated part of the said agreement.
9) The agreement dated 02.06.2025 stipulated that the Applicant shall provide services (as specified in Clause 2 of the RFP) to the Greater Chennai Corporation in the following manner:
a) The Applicant shall deploy 369 personnel for undertaking upkeeping and maintenance in the manner for each housing unit as prescribed by the Corporation. In addition, supervisors shall also be provided.
b) The aforesaid deployed personnel shall undertake sweeping and cleaning of all common areas on daily basis within the TNUHDB Housing Units and also undertake collection of waste from the households on daily basis.
c) The Applicant shall provide 375 units of 120 Ltr rotomac bins along with sweeping kits for each of the personnel for collecting wastage and garbage.
d) The Applicant shall provide 31 units of 1100 litre capacity compactor bins (for both dry and wet waste) at the entry of each housing unit.
e) The collected waste should be segregated and disposed as wet and dry waste in the compactor bin placed at each location which shall be further cleared by the Corporation.
f) The Applicant shall provide 1875 nos. of Coco Broom, 1125 nos. of Bass Broom, 1125 nos. of Iron Rake, 1125 nos. of Penku, 148 tons of Bleaching powder, 297 tons of Lime powder.
g) Further, the Applicant also provides the welfare items required by the personnel deployed such as 750 Uniforms, 9000 gloves and mask, 750 shoe set, 1500 caps, 1500 reflecting PPE kit, 375 rain coat and 1,01,250 mask are also procured by the bidder during the contract period of nine months at his own cost.
10) It is submitted that Article 243 W of the Constitution of India provides powers, authority and responsibility of municipalities, etc. and subject to the provisions of this Constitution, the legislature of a State may, by law, endow the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provision for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to – (i)the preparation of plans for economic development and social justice; and (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;
11) It is submitted that Section 4 of the Chennai City Municipal Corporation Act, 1919 provides the enumeration of authorities that – (1) There shall be a Corporation charged with the Municipal. Government of the City of Chennai, to be known as the Municipal Corporation of Chennai. (2) The Corporation shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and may by the said name sue and be sued.
12) Therefore, the GCC being the Oldest Municipal Institution, the services provided by the applicant are in relation to function entrusted to a Municipal Corporation as laid down in Article 243W of the Constitution of India.
13) It is submitted that the service charge for the execution of work awarded under the agreement dated 02.06.2025 was proposed to be paid on pro rata basis in two stages: –
a) Stage 1: 60% of monthly service charge – Fixed payment – wherein it will be released ordinarily within 30 days of submission of invoices.
b) Stage 2: 40% of monthly service charge – Performance based payment wherein it will be paid after evaluation by the independent agency and due deducting of penalty if any based on the KPIs (Key Performance Indicators) as defined in clause 22 of the Agreement. Further, the performance payment will also be released ordinarily in 30 days of submission of invoices.
14) In furtherance to the Agreement dated 02.06.2025, the work commenced in the month of June 2025 wherein the contract value of Rs. 8,94,20,000/- towards service charge of upkeeping and maintenance of housing units includes manpower, consumables, and welfare kit for a period of 9 months. Accordingly, the Applicant in pursuance of execution of the work raised the following invoices:
| Invoice no. | Date of invoice | Amount | GST collected |
| JK/2025-26/041 | 01.08.2025 | 5930445 | Nil |
| JK/2025-26/053 | 12.08.2025 | 8851589 | Nil |
15) It is stated that the above invoices have been raised after the approval of an individual evaluation agency appointed by the corporation to monitor and approve the services done by the applicant.
16) Under these circumstances the applicant is filing the present application for advance ruling seeking clarification on the following questions:
1. What is the classification of the services under the GST Act viz., “upkeeping and maintenance” of Tamil Nadu Urban Habitat Development Board Housing Units in Zones 15 – Outer Perumbakkam?
2. Whether the aforesaid services provided by the Applicant is entitled to exemption under Serial No 3A of Notification No 12/2017 – Central Tax (Rate) dated 28.07.2017, as amended from time to time?
3. Applicant’s interpretation of law:
1. Query on classification of services : The applicant has not furnished any proposed classification of impugned services in the application. However, during personal hearing, the applicant stated that the probable SAC would be 999423-General Waste collection services, residential.
2. Query on applicability of Sl.No.3A of Notification No 12/2017- Central Tax (Rate), Dated 28.06.2017:
2.1. The applicant submitted that the Central Government, in exercise of its powers under Sections 9(3), 9(4), 11(1), 15(5) &148 of the Act on being satisfied that it was necessary in the public interest so to do, on the recommendations of the Council, exempted the following intrastate supply of service as specified in column (3) of the Table below from so much of the central tax leviable thereon under subsection (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:
| Si No. | Chapter, Section, Heading, Group of Service code (Tariff) |
Description of Services | Rate (%) | Condition |
| (1) | (2) | (3) | (4) | (5) |
| 3A | Chapter 99 | Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. | Nil | Nil |
2.2. The applicant submitted that to qualify for exemption under sl.no. 3A of the Notification 12/2017 Central Tax (Rate), three conditions have to be cumulatively satisfied:
a) The supply must be a Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply.
b) Such service must be provided to the Central Government, State government or Union Territory or Local authority.
c) If provided to a local authority such service must be by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.
2.3. The applicant submitted that they satisfied all the three pre conditions stipulated in sl.no.3A of Notification No. 12/2017 Central Tax (Rate) and is entitled to the impugned exemption as discussed hereunder:
(a) Supply is a composite supply of goods and services
1. The applicant submitted that vide agreement dated 02.06.2025 they shall provide services (as specified in Clause 2 of the RFP) to the Greater Chennai Corporation in the following manner:
a) The Applicant shall deploy 369 personnel for undertaking upkeeping and maintenance in the manner for each housing unit as prescribed by the Corporation. In addition, supervisors shall also be provided.
b) The aforesaid deployed personnel shall undertake sweeping and cleaning of all common areas on daily basis within the TNUHDB Housing Units and also undertake collection of waste from the households on daily basis.
c) The Applicant shall provide 375 units of 120 Lt rotomac bins along with sweeping kits for each of the personnel for collecting wastage and garbage.
d) The applicant shall provide 31 units of 1100 litre capacity compactor bins (for both dry and wet waste) at the entry of each housing unit.
e) The collected waste should be segregated and disposed as wet and dry waste in the compactor bin placed at each location which shall be further cleared by the Corporation.
f) The Application shall provide 1875s nos. of Coco Broom, 1125 nos. of Bass Broom, 1125 nos. of Iron Rake, 1125 nos. of Penku, 148 tons of Bleaching powder, 297 tons of lime powder.
g) Further, the Applicant also provides the welfare items required by the personnel deployed such as 750 Uniforms, 9000 gloves and mask, 750 shoe set, 1500 caps, 1500 reflecting PPE kit, 375 rain coat and 1,01,250 mask are also procured by the bidder during the contract period of nine months at his own cost of the agreement dated 02.06.2025.
2. The Applicant is supplier of composite supply of goods and services in the nature of supplying manpower for the upkeeping and maintenance of Tamil Nadu Urban Habitat Development Board Housing Units along with the consumables, tools, materials and equipment as prescribed in clause (3) of the agreement dated 02.06.2025.
3. The value of goods in the present case does not exceed 25% of the value of composite supply that has been provided to the Greater Chennai Corporation. Further, in order to prove the same, the Applicant is enclosing the certificate from the Chartered Accountant to establish the fact that the value of goods as per the tender agreement dated 02.06.2025 does not exceed 25% of the value of composite supply.
4. Additionally, the consumables that have been provided by the Applicant to the personnel is only for the purpose of completion of work with regards to the upkeeping and maintenance of Tamil Nadu Urban Habitat Development Board Housing Units; that with respect to the consumables, welfare kit used for the purpose of upkeeping and maintenance of Tamil Nadu Urban Habitat Development Board Housing Units, there is no transfer of ownership or possession to the Greater Chennai Corporation; that it is merely used for the purpose of work and the same is left as such once the contract period expires.
5. Therefore, the Applicant submitted that they satisfied the first pre-condition for entitlement to the exemption under Serial No 3 of Notification 12/2017-Central Tax (Rate). The supply is a composite supply of goods and services.
(b) Such service is provided to a local authority
1. The applicant submitted that Section 2(69) of the Act defines “local authority” to mean:
a) A “Panchayat” as defined in clause (d) of the article 243 of the constitution;
b) A “Municipality” as defined in. clause (e) of the article 243P of the constitution;
c) A Municipal Committee, a Zila Parishad, a District. Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund;
d) A Cantonment board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006);
e) A Regional Council or a District Council constituted under the sixth schedule to the constitution;
f) A Development Board constituted under Article 371 and article 371J of the Constitution; or
g) A Regional Council constituted under Article 371A of the Constitution;
2. The term “municipality” is defined under Article 243-P(e) to mean an institution of self-government constituted under Article 243Q stipulates that there shall be constituted in every state, in accordance with the provisions of Part IX-A; (a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area; (b) a Municipal Council for a smaller urban area; and (c) a Municipal Corporation for a larger urban area.
3. The Applicant herein is supplier of composite supply of goods and services in upkeeping and maintaining the Tamil Nadu Urban Habitat Development Board Housing Units to the Greater Chennai Corporation. The Madras Municipal Corporation Act, 1919 (as amended) provides the basic Statutory authority for the administration now.
4. Section 4 of the 1919 enactment constitutes the Corporation in the following manner:
I. “There shall be a Corporation charged with the Municipal Government of the City of Chennai, to be known as the Municipal Corporation of Chennai.
II. The Corporation shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold, and dispose of property and may by the said name sue and be sued.”
5. The Madras Municipal Corporation Act, 1919 was rechristened by The Tamil Nadu Act of 1996 as the Chennai City Municipal Corporation Act, 1919.
6. The Greater Chennai Corporation (GCC) is a “municipality” as defined under Article 243-P(e) read with Article 243Q. Therefore, they satisfied the second pre-condition for entitlement to the exemption under Serial No 3A of Notification 12/2017-Central Tax (Rate): The Supply rendered to a “local authority”.
(c) Supply is made in relation to a function entrusted to a Municipal Corporation under Article 243-W of the Constitution.
1. The applicant submitted that the third pre-condition for entitlement to the exemption is that such pure services rendered to a local authority must be in relation to a function entrusted to a Municipal Corporation under Article 243-W of the Constitution.
2. Part IX-A of the Constitution of India, inserted by the Constitution (Seventy Fourth) Amendment Act, 1992, deals with local-self Government and bears the title “municipalities”. The term “municipality” is defined under Article 243-P(e) to mean an institution of self-government constituted under Article 243Q.
3. Article 243Q stipulates that there shall be constituted in every state, in accordance with the provisions of Part DC-A: (a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area; and (c) a Municipal Corporation for a larger urban area.
4. Article 243W provides for the powers, authority and responsibilities of municipalities. It states that, subject to the other provisions of the Constitution, the Legislature of a state may, by law, endow the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to (i) the preparation of plans for economic development and social justice; and (ii) the performance of functions and implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule,
5. The Twelfth Schedule to the Constitution contains 18 entries which are constitutionally designated as the functions of municipalities. Most notably, Entry 6 in the Twelfth Schedule provides for “Public health, sanitation conservancy and solid waste management” shall be a municipal function.
6. Article 243-W describes the power, authorities and responsibilities of the municipality; that Article 243 (a)(i) provides for the preparation of plans for economic development and social justice; in pursuance of which the State of Tamil Nadu, in order to provide inclusive housing for the urban poor families in Tamil. Nadu, The Tamil Nadu Slum Areas (Improvement and Clearance) Act, 1971 (Tamil Nadu Act 11 of 1971) was enacted with the objectives of improvement in slum areas by providing basic amenities including affordable housing to urban poor families. Section 34 of the Tamil Nadu Slum Areas (Improvement and Clearance) Act, 1971 provided for the establishment of the Tamil Nadu Slum Clearance Board.
7. Subsequently, the Government has changed the nomenclature of Tamil Nadu Slum Clearance Board as “Tamil Nadu Urban Habitat Development Board” vide 0.0. (Ms). No. 103, Housing and urban Development Department, dated 01.09.2021. Accordingly, the Government amended the Tamil Nadu Slum Areas (Improvement and Clearance) Act, 1971 (Tamil Nadu Act 11 of 1971), to provide a statutory footing to the aforesaid change in nomenclature of the Board.
8. The services supplied by the Applicant to the Greater Chennai Corporation are in relation to a function entrusted to a Municipal Corporation under Article 243-W of the Constitution in as much as they pertain to upkeeping and maintenance of the Tamil Nadu Urban Habitat Development Board Housing Units in the city of Chennai.
4. The applicant falls under the administrative control of State. The concerned authorities of the Centre and State were addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. Remarks have been received from the jurisdictional State Authority stating that there are no pending proceedings on the questions raised in the Advance Ruling Application; that the classification of impugned services would be SAC 9997-Other services not elsewhere specified; that the applicant would qualify for exemption under sl.no.3A of impugned Notification subject to the condition that the value of goods supplied does not exceed 25% value of composite supply. As remarks have not been received from Centre authority, it is assumed that there are no pending proceedings against the applicant on the issues raised by the applicant in the ARA application.
5. Personal Hearing
5.1 The applicant was given an opportunity to be heard in person on 06.07.2026. Shri. S. Ramamurthy, Advocate, appeared for personal hearing as the authorized representative (AR) of M/ s. JAY KAY TRANS, Chennai. The AR reiterated the submissions made in their application for advance ruling and submitted copies of relevant notification and legal provisions. Regarding Query raised on classification of services, the AR said that the probable SAC would be 999423-General Waste collection services, residential.
5.2 On second query on eligibility of exemption, the AR said that the value of goods involved in the impugned services is only around 1.77% which is way below the 25% stipulated in the notification No.12/2017 CT(Rate) also backed by a Chartered Accountant certificate.
5.3 The AR also submitted a few images of Door to door sweeping and cleaning/garbage collection & segregation activity undertaken by the applicant.
5.4 The applicant was requested to furnish complete set of tender/Agreement copies with Greater Chennai Corporation by email.
6. Discussions and Findings:
6.1 We have carefully examined the submissions made by the applicant in their advance ruling application and the submissions made during personal hearing. We have also considered the issues involved, the relevant facts and the applicant’s submissions/interpretation of law with respect to the questions on which the advance ruling is sought.
Admissibility of queries raised in the application:
6.2 We find that the queries involving Classification of Composite supply of goods and services supplied by the applicant comprising of maintenance of Tamil Nadu Urban Habitat Development Board Housing Units in Zone 15-Outer Perumbakkam under contract with the Greater Chennai Corporation (GCC) and query on applicability of exemption under Entry 3A in Notification No 12/2017-Central Tax (Rate), dated 28.06.2017 issued under the provisions of the Central Goods and Services Tax Act, 2017, and the Tamil Nadu Goods and Services Tax Act, 2017, are liable for admission as they get covered under Section 97 (2) (b) of CGST/TNGST Act, 2017 under “Classification of goods and/or services or both and Applicability of a notification issued under the provisions of the Act”.
6.3 We find that the applicant has entered into an agreement with Greater Chennai Corporation (GCC), Solid Waste Management Department vide SWMC No.A7/1362/2025 dt.02.06.2025 as per which work order has been issued to the applicant for upkeeping and maintenance of Tamil Nadu Urban Habitat Housing Board units in Zone 15-Outer Perumbakkam, Chennai. It has been stipulated therein for the applicant to provide the said services by deploying 369 personnel for sweeping and cleaning of all common areas on daily basis within the TNUHDB units; to collect wastage and garbage; to provide 375 units of 1201,t rotomac bins alongwith sweeping kits for each of the personnel for collecting garbage; to provide 31 units of 1100 ltr capacity compactor bins (for both dry and wet waste) at the entry of each housing unit; to segregate and dispose the collected waste in the compactor bin placed in each location which shall further be cleared by the GCC; to provide 1875 nos. of coco broom, 1125 nos. of bass broom, 1125 nos. of iron rake, 1125 nos. of penku, 148 tons of bleaching powder, 297 tons of lime powder; to provide the welfare items required by the personnel deployed such as 750 uniforms, 9000 gloves and mask, 750 shoe set, 1500 caps, 1500 reflecting PPE kit, 375 rain coats and 1,01,250 masks during the entire contract period at the applicant’s own cost. The tenure of the contract is for 9 months from 17.05.2025 to 17.03.2026.
6.4.1 Against this factual background, taking up first the applicant’s query on classification of impugned services, it is seen that during personal hearing the applicant stated that the probable SAC for such services would be 999423-General Waste collection services, residential. Vide remarks submitted by the jurisdictional State GST officer, the classification of impugned services is covered under residuary heading SAC 9997 – Other Services not elsewhere specified., the reasons being the activity involves general upkeep, sanitation, cleaning and maintenance of housing units; it does not amount to Works Contract as defined under Sec.2(119) of the CGST Act; it is not merely manpower recruitment or supply even if manpower is used to execute the work and it is also not transport service; that such maintenance and civic amenity related services are not specifically covered elsewhere and therefore fall under SAC 9997.
6.4,2 We have perused Annexure to Notfn. No.11/2017-Central Tax (Rate) dt.28.06.2017 enlisting the Scheme of Classification of Services vis-à-vis the work contract awarded to the applicant by GCC. We find that the impugned comprehensive services of sweeping, cleaning, collecting, segregating and storing the garbage/waste in the specified bins undertaken by the applicant within the TNUHDB units in Zone 15 of Outer Perumbakkarn area are considered part of solid waste management activity which is a primary responsibility of the local government authority ie., GCC. Viewed in this light, we see that the impugned services would merit to be classified as proposed by the applicant under Heading 999423 which is more appropriate and specific to the nature of services undertaken, rather than preferring a general heading under the not elsewhere specified category. The same is extracted below:
Heading 9994: Sewage and waste collection, treatment and disposal and other
environmental protection services
Group 99942: Waste collection services
999423: General Waste collection services – residential
6.4.3. Further, as per the Explanatory Notes to Classification of Services, following is the scope of coverage of services under the heading SAC 999423:
999423 General waste collection services, residential
This service code includes:
general collection of waste, garbage, rubbish, refuse, trash, and commingled materials from residential locations, including curbside collection, back door collection, or automated collection on a flexible Or
regular schedule
6.4.4 In view of the above, we conclude that the services of upkeeping and maintenance of TNUHDB units at Perumbakkam by the applicant encompassing sweeping, cleaning, garbage removal in all common areas on daily basis within the would appropriately be classifiable under SAC 999423 – General Waste collection services — residential as proposed by the applicant.
6.5.1 Taking up next the applicant’s query on admissibility of exemption contemplated in Sl.No.3A of Notfn. No.12/2017-CT(Rate) dt.28.06.2017 as amended by Notfn. No. 2/2018- Central Tax (Rate) dt.25.01.2018, the relevant entry is extracted below:
| (1) | (2) | (3) | (4) | (5) |
| “3A | Chapter 99 | Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. | Nil | Nil”; |
6.5.2 It can be seen that the admissibility of exemption under sl.no.3A above, requires satisfaction of certain conditions foremost of which is discussed hereunder:
The supply should be in the nature of composite supply of goods and services.
(a) On a perusal of the agreement with the GCC it is amply clear that the scope of work encompasses services undertaken by way of sweeping and cleaning of all common areas within the TNUHDB housing units, including internal roads, spaces between residential blocks, open area, parking areas, playgrounds, parks, community hall or any building at least twice a day; the deployed staff shall also undertake collection of waste from household on daily basis. Further, the bidder shall procure and provide 120Ltr rotomac bins along with sweeping kits for each of the personnel for collecting waste and garbage and procure 1100 ltr capacity compactor bins at the entry of each housing unit as per the quantity specified; the collected waste should be segregated and disposed as wet and dry waste in the compactor bin; shall provide the consumable, tools, materials, equipments etc like broom, iron rake, bleaching powder, lime powder etc; shall provide welfare items for the personnel like uniform sets, gloves, masks, caps raincoats, reflecting PPE kit, shoe etc. at the applicant’s own cost.
(b) At this juncture it is imperative on our part to examine whether the impugned activities undertaken by the applicant would constitute ‘Composite supply of goods and services’ as stipulated in the impugned notification. Sec.2(30) of the COST Act, 2017 defines Composite supply thus:
“Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply”
(c) On a perusal of the agreement with GCC, the applicant has to undertake upkeep and maintenance of common areas/spaces in the TNUHDB units in Perumbakkam predominantly involving cleaning and garbage removal activities. The welfare kits consisting of mask, gloves, caps etc., are part of specific requirement as dictated by the GCC to be supplied to the cleaning personnel as a safety measure. Further, the GCC also requires the applicant to provide other items like brooms, penkus, bins, bleaching powder etc., which are apparently consumables used in the process of rendering the cleaning service that are to be procured by the applicant at his own cost. Interestingly by the applicant’s own. admission/ submission in the application ‘with respect to the consumables, welfare kit used, there is no transfer of ownership or possession to the Greater Chennai Corporation and merely used for the purpose of work and the same is left as such once the contract period expires’. Hence it automatically follows that the instant case does not involve any supply of goods to the GCC by the applicant. At the most the GCC is only specifying deployment of certain number of personnel to carry out the cleaning work, provision of welfare kits and consumables, provision of fixed size bins in specified locations, in order to ensure satisfactory performance of services entrusted in the contract, the cost of which to be borne by the applicant. We do not find any conditions of the agreement that are indicative or suggestive of any supply of goods to the GCC to satisfy the definition of ‘Composite supply’ of goods and services as claimed by the applicant. Consequently, we hold that the applicant does not qualify for the exemption contemplated under sl.no.3A of Notfn. ibid in respect of the impugned services rendered to GCC.
6.5.3 Having so held, when the first and foremost condition of composite supply is found to be not satisfied by the applicant, we deem it not necessary to discuss the other conditions of the impugned notification since it is mandatory that all the conditions have to be simultaneously satisfied to qualify for exemption.
6.6 In view of the foregoing discussions, we rule as under:
Ruling
1. The classification of services of upkeep and maintenance of TNUHDB units in Zone 15 – Outer Perumbakkam undertaken by the applicant as part of an agreement with Greater Chennai Corporation would fall under SAC 999423: General Waste collection services – residential.
2. The applicant is not eligible for exemption from GST under Sl.No.3A of Notin.No.12/2017-CT(Rate) dated 28.06.2017 and the corresponding Notification issued under TNGST Act, 2017 for the impugned supply of services not being ‘Composite supply of goods and services’.
